July 1, 2013

Has technology changed our world or just the incentive structures?

By Cindy Ivanac-Lillig

I am a news junkie. I love Flipboard, and I have Factiva and Google alerts set up for all sorts of finance and banking topics.

I often wonder what we did 15 years ago without all this technology. I’m still not sure; however, I am beginning to think that the world hasn’t changed all that much. We are just changing how quickly we are learning about it… and who we trust to teach us.

Today I was intrigued by an article that popped up in my news alert from the Financial Times (FT). I clicked on it, only to be greeted by a request to subscribe. Now, truth be told, I have an FT subscription at work, but instead of looking up my user name and password to log on, I just opened another browser window and searched for the article by title. I found a blog post that referenced the article, perhaps out of context, but I got the gist of the article and moved on with my morning reading. So, did I ever read the entire article? No. Did I even get the main point? I can’t really be sure.

My point is that I technically had access to a piece of journalism from a reputable news source, but it was easier to read a free and easily accessible recap of the story from a blogger I like. The free-of-charge stories you find on the internet are in large part opinion-led or crowd-sourced explanations, blogs or 140-word teasers. For some topics that is fine and Wikipedia has proven itself to be highly accurate under the rigors of academic research; however, when considering rather complicated and nuanced public and economic policy issues, it is difficult to see how a reader is incentivized to search out complete stories from objective and reputable journalism sources.

If I were still teaching my undergraduate economics class, I would assign the class this incentive problem: Evaluate how incentives are affecting our current structure of information flow and come up with ways in which policy-makers can incentivize citizens' demand and access to high-quality journalism? Our well-being depends, in part, on good public policy, which in turn depends on good information generated by trustworthy communication channels.

What do you think? And if you happen to be an educator, please let me know how you tackle the subject of incentives in your classroom.

Posted by Cindy at July 1, 2013 5:22 PM

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Comments

Why people still use to read news papers
when in this technological globe the whole thing is available on net?

I always hate the focus on cost of fuel but I unnerstadd it because you can't go anywhere without passing 10 signs telling you the latest gasoline price. It is very visible and I agree it probably better not to look at GDP but percentage of household income. The latest number I saw for gas expenditures for families was ~$4300 annually while the median household income was around $50K per year. So 8.6% of median income is a pretty high expense. Healthcare costs are rarely advertised and often hidden. A household's average cost is on the order of $9-10K in employee contributions to health insurance premiums and out of pocket expenditures while the employer kicks in about an equal amount as part of the employee's compensation package. The employer's contribution to healthcare puts downward pressure on wages. And remember, both employer and employee sends additional money to the healthcare industry via payroll taxes for Medicare. We seem to go nuts over the $4300 per year spent on gas while 4-5 times as much comes out a families' earnings to pay for healthcare. If you want to look at the real drag on the economy and employment, look at healthcare. One of the industries that seems to get LESS productive over time and get away with it with the help of governments.

Students are not incentivized to learn as much as before because technology give them all the information at their fingertips. So why learn something archaic, formulaic, traditional inside-out, when the needed information is something else and is at their fingertips? And as google gets better they know when they grow up they'll just ask the computer for whatever information they need. How do you convince students to put some of that information in their RAM instead of their hard drive?

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